Last week, Facebook rolled a significant update live, introducing an amalgamated News Feed and a new feature: the Ticker. Taking on the role of Recent News stream, the Ticker is where Edge Rank and Graph Rank, a similar concept introduced in the f8 keynote speech later in the week. Also introduced was the Timeline, the new way to view your profile. While Timeline seems to be a purely design-based change, it is clear that it has lasting effects on the future of Facebook Display Ads.

Note the differences between the new (left) and old (right) sidebars.

How is Facebook accidentally* affecting Display Ad performance?

Where will the “You and Your Friend” box go? This gives Page owners and app creators a one-stop area to give users social proof for their product. Without it, especially in a prominent position in the sidebar, connections may be initially thought of as diminished. However, it’s likely that this information will go somewhere else that can’t be shown in the demo Facebook provided.

Even more social proof has been removed in the ads by not displaying Likes in ads. This will likely drive down clickthrough rate, removing the value of “Social Clicks” in the Facebook Ads interface.

White space hasn’t been diminished, but width of the ad space has by about one half. This might decrease attention by making it one of the smallest elements on the page.

Most obviously, the number of ads on the main profile page have been cut in half to 2, dropping to one as you scroll down and the sidebar navigation expands. On the Activity Log page, there are three. The ads are persistent, scrolling with the page, but are limited. The removal of these ads may mark a major change in how Facebook views advertisers.

Before the new layout was announced, All Facebook argued that Facebook isn’t seeking to help advertisers in its News Feed design or algorithm. However, the opposite may be true when it comes to the two overlooked aspects of the update and announced change: the real-time Ticker and the expansion of Open Graph. While the original Open Graph was seen as a cataloging system, letting anything on the internet be given a face on Facebook, the new expansion of verbs allows users to chronicle their interactions — a theme pulled from the Timeline.

A New Mindset

Marketers already knew Facebook ads were a bit of a crapshoot — a .05% CTR is abysmal, two orders of magnitude lower than the 2% reported for Google Ads. This small redesign may have serious effects, though, and advertisers might be blindsided. The lack of social proof hinders ad reach, but it seems Facebook wants to alleviate this by showing ads to the user for a longer time, especially “quality” first-position ones. as browsing of Timelines likely would be a pursuit that takes longer than the current profile. This, however, could backfire, as targeted ads based on the visible content being interacted with on the profile at that moment may drive more qualified traffic.

It seems, then, that marketers and business owners need to change their mindset about Facebook. No longer is it a just another display ad network, performing well only when the stars align and demography lines up with expectations. Instead, marketers need to embrace the Open Graph, which allows actions to show in the Ticker, to provide natural advertising via the social network — working with the medium instead of alongside or against it.

Optimizing Your Campaign for the New Facebook

With the new mindset for advertising on Facebook, campaign strategy has to change. No longer can an advertiser scrape by on the bare minimum, dropping a display ad to a bare Facebook Fan Page or off-site page with no Open Graph interactivity. The first step is to optimize your Facebook presence by doing all the things marketers used to, but more consistently:

Fan gating to incentivize Likes, providing an incentive to grow your fanbase and populating your business name and Facebook page to the feed.

Deeper consideration about Facebook Page SEO, given the high traffic from search engines.

Linking your site and any Facebook tab interactivity to the Open Graph, through meta tags and apps

While the first two are relatively widespread, using Open Graph, especially on outside sites, is still somewhat underused. The meta tags, in a sense returning to SEO circa 1996, allow you to control what is pushed to the Ticker or News Feed. However, creating interactivity on a site beyond a simple Like Button is new.

The first step is to create multiple actions for each page, based on what the business offers on its site. For a music streaming site, “Like” is a fine verb, but what about “Listened to” or “Commented on?” For an e-commerce site, to “Like” a product isn’t as clear as “Bought,” “Wants,” or “Reviewed.” Each action on a site can turn your users’ regular interaction on the site into its own mini-ad with social proof for the viewer, coming down the Ticker whenever the users’ friends are online.

The next step is to provide something for your users when they connect to your page, giving the visitor an incentive to let you advertise via their Facebook profile. For a blog, one idea would be to tailor your homepage content based on users’ likes and interests, showing the category that interests them most. Important to keep in mind, however, is that Facebook reports a 3% drop in conversion for each permission you ask for; therefore explaining what you do with the data will keep the more private folks Connecting.

Are Display Ads Dead?

Of course, the worry for the internet marketer is that the entire game has changed — up is down, left is right, PPC display ads aren’t effective. This isn’t true, and likely won’t ever be so long as Facebook doesn’t eliminate ads completely. In the new mindset, ads are a Like generator — get the visitor to a targeted fan page with gating or an off-site landing page, get the Like and offer a little cake as thanks. They will be useful when a company doesn’t have high brand recognition and is hurting for people to be their “Ticker Ads.” Furthermore, targeting people who already Like your page for events, blog giveaways, and contests will likely remain a powerful campaign strategy for Facebook Display ads.

My friend uses it all the time... Would I Like Spotify?

When it comes to the new mindset, the concepts behind campaign choices build without necessarily breaking down the old maxims. The new mindset provides reciprocal benefit to the social universe using Facebook, instead of trying to solely draw revenue from the social aspects. While this seems like “Field of Dreams” advice, it’s time to rethink the display ad and think about what really will drive traffic and eyes and dollars to your site.

Doug is a Google Adwords Certified and Microsoft Adcenter Accredited member of the Paid Search and Production teams at Search Influence, a full-service website promotion company. Read his and his other team members' views on internet marketing on their blog, or follow them at @SearchInfluence.